1. Delhi will offer you more opportunity as a CA student. So it is good to do article ship from Delhi considering that you may have to shift to a big city once you become CA. It will help you to adjust in future.
2. According to me, a medium sized firm is a good option. They will offer good work and will also be flexible for your studies requirement. Big firms may not be flexible and small firms may not offer good work.
3. You will have to consult your seniors or friends who are already doing article ship to know whether a firm is big, medium or small.
4. Yes, one can take transfer in the first year. Always inquire about the work culture and principal' nature before joining a firm to avoid issues in future.